According to the National Statistics, congestion costs UK economyï 20 billion in 2000, and this figure tend to increase in the near future. Hence government tends to intervene and launch sustainable transport policies to reduce this cost. "A new deal for transport" and "ten year transport plan to 2010" are the two major products.
Road pricing is the major policy that government use to tackle the problem. This is mainly to do with increasing the cost of urban travel to motorists through a variety of existing and proposed fiscal measures. This is a big category and includes petrol tax, exercise vehicle duties, license fee, parking charges and mainly congestion charge.
This is market based approach, which can allocate traffic efficiently to different modes of transport through market mechanism. In another word, it can charge the costs which almost in line with its negative externalities, and hence can be seen economically efficient. But to what extent this charge can discourage road users, much would depends on, firstly, the amount of charge; and secondly, the elasticity of demand. E.g. petrol demand is highly inelastic, and hence any tax on it would bring only little effect.
But, on the other hand, congestion charge seems to be a big money for most of the car users and hence this could reduce car usage by a considerable amount. Although it can achieve its goal, it may not be favorable among the society, and therefore, there is a political conflict on the policy. However, there is another big advantage, revenue from road pricing could be used to fund improvements in public transport and hence raise sustainability. Overall, it can be seen as a very effective method only if the level of charge is carefully fixed in relation to the external costs.
Road pricing also comes up with better road network. This mainly concern with two approaches. One is to make better use of it. This is a typical approach put forward by traffic engineers and can involve controlling parking on busy roads, creating urban clearways and bus lanes, improving road junctions and park-and-ride schemes. The other is to build more roads. This is a natural solution in many respects and it has been persistently practiced in many towns and cities. Realistically, infrastructure development is necessary, but the problem is that our ability to construct, fund and accept new road schemes, particularly in urban areas, is below what is necessary to enhance the flow of traffic. There is also the additional problem that when new roads are built, this tends in itself to generate and increase in demand.
Meanwhile, we can improve public transport. This is the logical approach that has been pursued with much more vigour in the rest of Europe, where many cities have integrated efficient passenger transport systems. This has not been favoured by the UK government since early 1980s, mainly because it needs huge amount of subsidies and extensive local support.
Government could also combat congestion through regulation. They limit the car and lorry usage; restrict usage in certain areas during a certain period of time in the day. But, whether it is effective, much would be depend on the enforcement of the law. Moreover, practice administrative issues could also be costly.
To conclude, there are various policies which have been designed to improve the use of existing road capacity. These include policies which can be introduced influence the demand for road space; there are also policies designed to expand road capacity, which can be viewed as supply side policies. Overall, these policies are designed to lower the costs of congestion, but whether they can achieve this goal or not, it would ccccdepend on various factors.